NEW YORK, Jan. 26, 2023 (GLOBE NEWSWIRE) -- Amalgamated Financial Corp. (the “Company” or “Amalgamated”) (Nasdaq: AMAL), the holding company for Amalgamated Bank (the “Bank”), today announced financial results for the fourth quarter ended December 31, 2022.

Fourth Quarter 2022 Highlights (on a linked quarter basis)

  • Net income of $24.8 million, or $0.80 per diluted share, compared to $22.9 million, or $0.74 per diluted share.
  • Core net income excluding the impact of solar tax equity investments (non-GAAP)1 was $27.2 million, or $0.87 per diluted share, as compared to $24.8 million, or $0.80 per diluted share.
  • Average cost of deposits of 34 basis points for the quarter, where non-interest-bearing deposits comprised 51% of total deposits.
  • Loans receivable, net of allowance and deferred fees and costs, increased $231.8 million, or 6.1%, to $4.1 billion.
  • PACE assessments grew $55.2 million to $911.9 million, comprised of a $34.6 million increase in commercial and a $20.6 million increase in residential.
  • Net interest income was level at $67.3 million compared to $67.6 million, while net interest margin grew by 6 basis points to 3.56%, compared to 3.50%.

Full Year 2022 Highlights (from year end 2021)

  • Net income of $81.5 million, or $2.61 per diluted share, compared to $52.9 million, or $1.68 per diluted share.
  • Core net income excluding the impact of solar tax equity investments (non-GAAP)1 was $87.2 million, or $2.79 per diluted share, as compared to $55.1 million, or $1.75 per diluted share, or an increase of 58.3%.
  • Total deposits increased by $238.8 million, or 3.76% to $6.6 billion, with a peak balance of $7.4 billion in August leading up to the congressional elections held in November.
  • Loans receivable, net of allowance and deferred fees and costs, increased $784.6 million, or 23.9%, to $4.1 billion.
  • Net interest income increased $65.5 million or 37.6%, to $239.8 million compared to $174.3 million.
  • Nonaccrual loans decreased to $21.7 million or 0.5% of total loans compared to $28.2 million or 0.9% of total loans.
  • Credit quality improved as classified or criticized assets declined by $125.3 million or 54.3% to $105.6 million.
  • Regulatory capital remains above bank “well capitalized” standards.

Priscilla Sims Brown, President and Chief Executive Officer, commented, “Our record fourth quarter and full year 2022 results reflect the successful execution of the strategy that we outlined eighteen months ago.   A strategy that was designed to accelerate loan growth, improve our profitability, and drive earnings as we strived to be the most improved bank in the country for financial metrics.   I am proud to say that our full year 2022 results have exceeded our expectations as we grew our loan portfolio 23.9%, improved our return on average assets 24 bps to 1.05% and increased diluted earnings per share 56% to $2.61. With these results and momentum, I am excited to lead our Bank into its next centennial and I am delighted to honor the women and men who have shaped Amalgamated’s 100 year-old history.”

Fourth Quarter Earnings

Net income for the fourth quarter of 2022 was $24.8 million, or $0.80 per diluted share, compared to $22.9 million, or $0.74 per diluted share, for the third quarter of 2022. The $1.9 million increase for the fourth quarter of 2022 was primarily due to an $0.7 million decrease in non-interest expense, a $0.9 million decrease in provision for loan losses, and a $1.3 million decrease in income tax expense related to an elected change in taxable income recognition, offset by a $0.3 million decrease in net interest income, a $0.8 million decrease in non-interest income.

Core net income excluding the impact of solar tax equity investments (non-GAAP)1 for the fourth quarter of 2022 was $27.2 million, or $0.87 per diluted share, compared to $24.8 million, or $0.80 per diluted share, for the third quarter of 2022. Excluded from core net income for the fourth quarter of 2022 was $1.4 million of pre-tax losses on the sale of securities and $1.7 million of accelerated depreciation from our solar tax equity investments. Excluded from the third quarter of 2022 was $1.8 million of pre-tax losses on the sale of securities, $0.6 million of pre-tax gains on subordinated debt repurchases, and $1.3 million of accelerated depreciation from our solar tax investments.

Presentation excluding the temporary effect of the tax credits and accelerated depreciation of our solar tax equity investments isolates the financial statement volatility associated with these investments.

Net interest income was $67.3 million for the fourth quarter of 2022, compared to $67.6 million for the third quarter of 2022. The $0.3 million decrease from the preceding quarter reflected increased interest expense on deposits of $3.2 million driven by a 40 basis point increase in interest-bearing deposit costs, and $4.8 million in increased interest expense from borrowings, primarily related to interest expense on Federal Home Loan Bank advances. The increase in interest expense was offset by higher interest income on securities of $4.0 million, driven by a 73 basis point increase in securities yield, and loan interest income which increased by $4.2 million, driven by a $283.9 million increase in average loan balance, and a 13 basis point increase in loan yields.

Net interest margin was 3.56% for the fourth quarter of 2022, an increase of six basis points from 3.50% in the third quarter of 2022. Increases in yields on interest-earning assets were offset by increased rates and average balances of interest-bearing liabilities, particularly due to an increase in Federal Home Loan Bank advances. Prepayment penalties earned in loan income contributed one basis point to our net interest margin in the fourth quarter of 2022, compared to four basis points in the third quarter of 2022.

Provision for loan losses totaled an expense of $4.4 million for the fourth quarter of 2022 compared to an expense of $5.4 million in the third quarter of 2022. The decrease in provision expense in the fourth quarter of 2022 was primarily related to $1.6 million in charge-offs related to nonperforming loans that were transferred to held for sale in the previous quarter and subsequently sold in the current quarter. Adjusted, our provision for loan losses in the current quarter increased by $0.6 million related to higher loan balances, increases in certain specific reserves, and elevated charge-offs in consumer solar loans.

Core non-interest income excluding the impact of solar tax equity investments (non-GAAP)1 was $7.3 million for the fourth quarter of 2022, compared to $7.5 million in the third quarter of 2022. The decrease of $0.2 million was primarily driven by slightly lower Trust Department fees, a $0.2 million loss on the disposition of other real estate owned, and a $0.6 million loss on the sale of nonperforming held for sale loans, mostly offset by increased business banking fees and one-time beneficiary income on bank-owned life insurance.

Core non-interest expense (non-GAAP)1 for the fourth quarter of 2022 was $35.6 million, a decrease of $0.7 million from the third quarter of 2022. This was primarily driven by a $1.5 million decrease in professional fees, offset by a $0.5 million increase in advertising and promotion expense, and increased other expenses related to recruiting services.

Our provision for income tax expense was $6.8 million for the fourth quarter of 2022, compared to $8.1 million for the third quarter of 2022. Our effective tax rate for the fourth quarter of 2022 was 21.6%, compared to 26.0% for the third quarter of 2022. The decrease in tax expense was related to an elected change in taxable income recognition. Without the change in election, our effective tax rate was 26.1%.

Balance Sheet Quarterly Summary

Total assets were $7.8 billion at December 31, 2022, compared to $7.9 billion at September 30, 2022. Notable changes within individual balance sheet line items include a $96.1 million decrease in investment securities, $231.8 million increase in loans receivable, net, a $167.1 million decrease in resell agreements, a $565.3 million decrease in deposits, and an increase in borrowed funds of $505.0 million.

Total loans receivable, net of allowance and deferred fees and costs, at December 31, 2022 were $4.1 billion, an increase of $231.8 million, or 6.1%, compared to September 30, 2022. The increase in loans is primarily driven by a $120.6 million increase in commercial and industrial loans, an $82.7 million increase in multifamily loans, and a $39.8 million increase in residential loans, offset by a $3.8 million decrease in consumer and other loans, a $1.3 million decrease in construction and land development loans, and a $2.9 million decrease in commercial real estate loans as we continue to reduce that asset class exposure. Our continued focus on credit quality improvement resulted in $12.7 million of payoffs of criticized or classified loans in the quarter.

Deposits at December 31, 2022 were $6.6 billion, a decrease of $565.3 million, or 7.9%, as compared to $7.2 billion as of September 30, 2022. Deposits held by politically active customers, such as campaigns, PACs, advocacy-based organizations, and state and national party committees were $643.6 million as of December 31, 2022, a decrease of $513.7 million compared to $1.2 billion as of September 30, 2022. The decline in political deposits is related to the conclusion of congressional elections in the fourth quarter of 2022 and is in-line with expectations we shared in the previous quarter.

Non-interest-bearing deposits represent 53% of average deposits and 51% of ending deposits for the quarter ended December 31, 2022, contributing to an average cost of deposits of 34 basis points in the fourth quarter of 2022.

Nonperforming assets totaled $34.8 million, or 0.4% of period-end total assets at December 31, 2022, a decrease of $19.5 million, compared with $54.3 million, or 0.7% on a linked quarter basis. The decrease in nonperforming assets was primarily driven by the sale of $10.2 million of restructured loans held for sale, and $12.7 million in payoffs of criticized or classified loans.

The allowance for loan losses increased $2.9 million to $45.0 million at December 31, 2022 from $42.1 million at September 30, 2022, primarily due to higher loan balances. At December 31, 2022, we had $27.8 million of impaired loans for which a specific allowance of $5.7 million was made, compared to $38.2 million of impaired loans at September 30, 2022 for which a specific allowance of $5.2 million was made. The ratio of allowance to total loans was 1.10% at December 31, 2022 and 1.09% at September 30, 2022.

Capital Quarterly Summary

As of December 31, 2022, our Common Equity Tier 1 Capital Ratio was 11.82%, Total Risk-Based Capital Ratio was 14.28%, and Tier-1 Leverage Capital Ratio was 7.52%, compared to 11.91%, 14.43% and 7.16%, respectively, as of September 30, 2022. Stockholders’ equity at December 31, 2022 was $509.0 million, compared to $487.7 million at September 30, 2022. The increase in stockholders’ equity was primarily driven by $24.8 million of net income, partially offset by $3.2 million in dividends. There was no significant change during the quarter to the accumulated other comprehensive loss due to the tax effected mark-to-market on our securities portfolio.

Our tangible book value per share (non-GAAP)1 was $16.05 as of December 31, 2022 compared to $15.37 as of September 30, 2022, primarily a result of $24.8 million of net income in the quarter. Tangible common equity (non-GAAP)1 was 6.30% of tangible assets, compared to 6.00% as of September 30, 2022.

Conference Call

As previously announced, Amalgamated Financial Corp. will host a conference call to discuss its fourth quarter results today, January 26, 2023 at 11:00am (Eastern Time). The conference call can be accessed by dialing 1-877-407-9716 (domestic) or 1-201-493-6779 (international) and asking for the Amalgamated Financial Corp. Fourth Quarter 2022 Earnings Call. A telephonic replay will be available approximately two hours after the call and can be accessed by dialing 1-844-512-2921, or for international callers 1-412-317-6671 and providing the access code 13733696. The telephonic replay will be available until February 2, 2023.

Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the investor relations section of our website at http://ir.amalgamatedbank.com/. The online replay will remain available for a limited time beginning immediately following the call.

The presentation materials for the call can be accessed on the investor relations section of our website at https://ir.amalgamatedbank.com/.

About Amalgamated Financial Corp.

Amalgamated Financial Corp. is a Delaware public benefit corporation and a bank holding company engaged in commercial banking and financial services through its wholly-owned subsidiary, Amalgamated Bank. Amalgamated Bank is a New York-based full-service commercial bank and a chartered trust company with a combined network of five branches across New York City, Washington D.C., and San Francisco, and a commercial office in Boston. Amalgamated Bank was formed in 1923 as Amalgamated Bank of New York by the Amalgamated Clothing Workers of America, one of the country’s oldest labor unions. Amalgamated Bank provides commercial banking and trust services nationally and offers a full range of products and services to both commercial and retail customers. Amalgamated Bank is a proud member of the Global Alliance for Banking on Values and is a certified B Corporation®. As of December 31, 2022, our total assets were $7.8 billion, total net loans were $4.1 billion, and total deposits were $6.6 billion. Additionally, as of December 31, 2022, our trust business held $38.1 billion in assets under custody and $13.4 billion in assets under management.

Non-GAAP Financial Measures

This release (and the accompanying financial information and tables) refers to certain non-GAAP financial measures including, without limitation, “Core operating revenue,” “Core non-interest expense,” “Core net income,” “Tangible common equity,” “Average tangible common equity,” “Core return on average assets,” “Core return on average tangible common equity,” and “Core efficiency ratio.”

Our management utilizes this information to compare our operating performance for December 31, 2022 versus certain periods in 2022 and 2021 and to prepare internal projections. We believe these non-GAAP financial measures facilitate making period-to-period comparisons and are meaningful indications of our operating performance. In addition, because intangible assets such as goodwill and other discrete items unrelated to our core business, which are excluded, vary extensively from company to company, we believe that the presentation of this information allows investors to more easily compare our results to those of other companies.

The presentation of non-GAAP financial information, however, is not intended to be considered in isolation or as a substitute for GAAP financial measures. We strongly encourage readers to review the GAAP financial measures included in this release and not to place undue reliance upon any single financial measure. In addition, because non-GAAP financial measures are not standardized, it may not be possible to compare the non-GAAP financial measures presented in this release with other companies’ non-GAAP financial measures having the same or similar names. Reconciliations of non-GAAP financial disclosures to comparable GAAP measures found in this release are set forth in the final pages of this release and also may be viewed on our website, amalgamatedbank.com.

Terminology

Certain terms used in this release are defined as follows:

“Core efficiency ratio” is defined as “Core non-interest expense” divided by “Core operating revenue.” We believe the most directly comparable performance ratio derived from GAAP financial measures is an efficiency ratio calculated by dividing total non-interest expense by the sum of net interest income and total non-interest income.

“Core efficiency ratio excluding solar tax impact” is defined as “Core non-interest expense” divided by “Core operating revenue excluding solar tax impact.” We believe the most directly comparable performance ratio derived from GAAP financial measures is an efficiency ratio calculated by dividing total non-interest expense by the sum of net interest income and total non-interest income.

“Core net income” is defined as net income after tax excluding gains and losses on sales of securities, gains on the sale of owned property, costs related to branch closures, restructuring/severance costs, acquisition costs, and taxes on notable pre-tax items. We believe the most directly comparable GAAP financial measure is net income.

“Core net income excluding solar tax impact” is defined as net income after tax excluding gains and losses on sales of securities, gains on the sale of owned property, costs related to branch closures, restructuring/severance costs, acquisition costs, tax credits and accelerated depreciation on solar equity investments, and taxes on notable pre-tax items. We believe the most directly comparable GAAP financial measure is net income.

“Core non-interest expense” is defined as total non-interest expense excluding costs related to branch closures, restructuring/severance, and acquisitions. We believe the most directly comparable GAAP financial measure is total non-interest expense.

“Core non-interest income excluding the impact of solar tax equity investments” is defined as total non-interest income excluding gains and losses on sales of securities, gains on the sale of owned property, and tax credits and depreciation on solar equity investments. We believe the most directly comparable GAAP financial measure is non-interest income.

“Core operating revenue” is defined as total net interest income plus “core non-interest income”, defined as non-interest income excluding gains and losses on sales of securities and gains on the sale of owned property. We believe the most directly comparable GAAP financial measure is the total of net interest income and non-interest income.

“Core operating revenue excluding solar tax impact” is defined as total net interest income plus non-interest income excluding gains and losses on sales of securities, gains on the sale of owned property, and tax credits and depreciation on solar equity investments. We believe the most directly comparable GAAP financial measure is the total of net interest income and non-interest income.

“Core return on average assets” is defined as “Core net income” divided by average total assets. We believe the most directly comparable performance ratio derived from GAAP financial measures is return on average assets calculated by dividing net income by average total assets.

“Core return on average assets excluding solar tax impact” is defined as “Core net income excluding solar tax impact” divided by average total assets. We believe the most directly comparable performance ratio derived from GAAP financial measures is return on average assets calculated by dividing net income by average total assets.

“Core return on average tangible common equity” is defined as “Core net income” divided by “Average tangible common equity.” We believe the most directly comparable performance ratio derived from GAAP financial measures is return on average equity calculated by dividing net income by average total stockholders’ equity.

“Core return on average tangible common equity excluding solar tax impact” is defined as “Core net income excluding solar tax impact” divided by “Average tangible common equity.” We believe the most directly comparable performance ratio derived from GAAP financial measures is return on average equity calculated by dividing net income by average total stockholders’ equity.

“Tangible assets” are defined as total assets excluding, as applicable, goodwill and core deposit intangibles. We believe the most directly comparable GAAP financial measure is total assets.

“Tangible common equity”, and “Tangible book value” are defined as stockholders’ equity excluding, as applicable, minority interests, preferred stock, goodwill and core deposit intangibles. We believe that the most directly comparable GAAP financial measure is total stockholders’ equity.

Forward-Looking Statements

Statements included in this release that are not historical in nature are intended to be, and are hereby identified as, forward-looking statements within the meaning of the Private Securities Litigation Reform Act, Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally can be identified through the use of forward-looking terminology such as “may,” “will,” “anticipate,” “should,” “would,” “believe,” “contemplate,” “expect,” “estimate,” “continue,” “in the future,” “may” and “intend,” as well as other similar words and expressions of the future. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors, any or all of which could cause actual results to differ materially from the results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: (i) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (ii) continued fluctuation of the interest rate environment; (iii) our inability to maintain the historical growth rate of the loan portfolio; (iv) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (v) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on our results, including as a result of compression to net interest margin; (vi) greater than anticipated adverse conditions in the national or local economies including in our core markets, which may have an adverse impact on our business, operations and performance, and could have a negative impact on our credit portfolio, share price, and borrowers; (vii) fluctuations or unanticipated changes in interest rates on loans or deposits or that affect the yield curve; (viii) any matter that would cause us to conclude that there was impairment of any asset, including intangible assets; (ix) the results of regulatory examinations; (x) potential deterioration in real estate values; (xi) changes in legislation, regulation, policies, or administrative practices, whether by judicial, governmental, or legislative action; (xii) the risk that the preliminary financial information reported herein and our current preliminary analysis will be different when our review is finalized; (xiii) increased competition for experienced executives in the banking industry; (xiv) a failure in or breach of our operational or security systems or infrastructure, or those of third party vendors or other service providers, including as a result of unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; and (xv) the outcome of any legal or regulatory proceedings that may be instituted against us; and (xvi) physical and transitional risks related to climate change as they impact our business and the businesses that we finance. Additional factors which could affect the forward-looking statements can be found in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the SEC and available on the SEC's website at https://www.sec.gov/. We disclaim any obligation to update or revise any forward-looking statements contained in this release, which speak only as of the date hereof, whether as a result of new information, future events or otherwise, except as required by law.

Investor Contact:
Jamie Lillis
Solebury Strategic Communications
shareholderrelations@amalgamatedbank.com
800-895-4172

Consolidated Statements of Income

 Three Months Ended Year Ended
 December 31, September 30, December 31, December 31,
($ in thousands) 2022   2022   2021   2022   2021 
INTEREST AND DIVIDEND INCOME(unaudited) (unaudited) (unaudited) (unaudited)  
Loans$42,492  $38,264  $32,138  $145,649  $123,318 
Securities 35,567   31,580   16,549   110,654   56,557 
Interest-bearing deposits in banks 485   971   200   2,186   651 
Total interest and dividend income 78,544   70,815   48,887   258,489   180,526 
INTEREST EXPENSE         
Deposits 5,682   2,491   1,407   11,056   5,823 
Borrowed funds 5,516   696   399   7,593   399 
Total interest expense 11,198   3,187   1,806   18,649   6,222 
NET INTEREST INCOME 67,346   67,628   47,081   239,840   174,304 
Provision for (recovery of) loan losses 4,434   5,363   3,568   15,002   (287)
Net interest income after provision for loan losses 62,912   62,265   43,513   224,838   174,591 
NON-INTEREST INCOME         
Trust Department fees 3,607   3,872   2,881   14,449   13,352 
Service charges on deposit accounts 2,991   2,735   2,414   10,999   9,355 
Bank-owned life insurance 986   785   530   3,868   2,388 
Gain (loss) on sale of securities (1,373)  (1,844)  (106)  (3,637)  649 
Gain (loss) on sale of loans, net (578)  (367)  181   (610)  1,887 
Gain (loss) on other real estate owned, net (168)  —   —   (168)  (407)
Equity method investments (1,416)  (1,151)  5,870   (2,773)  150 
Other 177   973   591   1,769   1,015 
Total non-interest income 4,226   5,003   12,361   23,897   28,389 
NON-INTEREST EXPENSE         
Compensation and employee benefits 19,470   19,527   17,359   74,712   69,844 
Occupancy and depreciation 3,345   3,481   3,730   13,723   14,023 
Professional fees 1,684   3,173   3,742   10,417   12,961 
Data processing 4,072   4,149   5,194   17,732   16,042 
Office maintenance and depreciation 696   807   695   3,012   3,057 
Amortization of intangible assets 262   262   302   1,047   1,207 
Advertising and promotion 1,331   795   982   3,741   3,230 
Other 4,710   4,064   3,028   16,187   11,891 
Total non-interest expense 35,570   36,258   35,032   140,571   132,255 
Income before income taxes 31,568   31,010   20,842   108,164   70,725 
Income tax expense (benefit) 6,813   8,066   4,918   26,687   17,788 
Net income 24,755   22,944   15,924   81,477   52,937 
Earnings per common share - basic$0.81  $0.75  $0.51  $2.64  $1.70 
Earnings per common share - diluted$0.80  $0.74  $0.50  $2.61  $1.68 
          

Consolidated Statements of Financial Condition

($ in thousands)December 31,
2022		 September 30, 2022 December 31, 2021
Assets(unaudited) (unaudited)  
Cash and due from banks$5,110  $3,404  $8,622 
Interest-bearing deposits in banks 58,430   62,819   321,863 
Total cash and cash equivalents 63,540   66,223   330,485 
Securities:     
Available for sale, at fair value 1,812,476   1,957,486   2,113,410 
Held-to-maturity, at amortized cost 1,541,301   1,492,423   843,569 
Loans held for sale 7,943   17,916   3,279 
Loans receivable, net of deferred loan origination costs 4,106,002   3,871,290   3,312,224 
Allowance for loan losses (45,031)  (42,122)  (35,866)
Loans receivable, net 4,060,971   3,829,168   3,276,358 
      
Resell agreements 25,754   192,834   229,018 
Accrued interest and dividends receivable 41,441   34,767   28,820 
Premises and equipment, net 9,856   10,539   11,735 
Bank-owned life insurance 105,624   105,915   107,266 
Right-of-use lease asset 28,236   29,991   33,115 
Deferred tax asset 62,507   64,046   26,719 
Goodwill 12,936   12,936   12,936 
Other intangible assets 3,105   3,366   4,151 
Equity investments 8,305   7,683   6,856 
Other assets 59,129   42,924   50,159 
Total assets$7,843,124  $7,868,217  $7,077,876 
Liabilities     
Deposits$6,595,037  $7,160,307  $6,356,255 
Subordinated debt 77,708   77,679   83,831 
Borrowed funds 580,000   75,000   — 
Operating leases 40,779   43,229   48,160 
Other liabilities 40,645   24,264   25,755 
Total liabilities$7,334,169  $7,380,479  $6,514,001 
      
Stockholders’ equity     
Common stock, par value $.01 per share 307   307   311 
Additional paid-in capital 286,947   286,431   297,975 
Retained earnings 330,275   308,743   260,047 
Accumulated other comprehensive income (loss), net of income taxes (108,707)  (107,876)  5,409 
Total Amalgamated Financial Corp. stockholders' equity 508,822   487,605   563,742 
Noncontrolling interests 133   133   133 
Total stockholders' equity 508,955   487,738   563,875 
Total liabilities and stockholders’ equity$7,843,124  $7,868,217  $7,077,876 
      

Select Financial Data

 As of and for the As of and for the
 Three Months Ended Year Ended
 December 31, September 30, December 31, December 31,
(Shares in thousands) 2022  2022  2021  2022  2021
Selected Financial Ratios and Other Data:         
Earnings per share         
Basic$0.81 $0.75 $0.51 $2.64 $1.70
Diluted 0.80  0.74  0.50  2.61  1.68
Core net income (non-GAAP)         
Basic$0.84 $0.78 $0.54 $2.74 $1.75
Diluted 0.83  0.77  0.53  2.70  1.72
Core net income excluding solar tax impact (non-GAAP)         
Basic$0.89 $0.81 $0.41 $2.83 $1.77
Diluted 0.87  0.80  0.40  2.79  1.75
Book value per common share (excluding minority interest) 16.57  15.90  18.11  16.57  18.11
Tangible book value per share (non-GAAP) 16.05  15.37  17.56  16.05  17.56
Common shares outstanding, par value $.01 per share(1) 30,700  30,672  31,130  30,700  31,130
Weighted average common shares outstanding, basic 30,679  30,673  31,108  30,818  31,104
Weighted average common shares outstanding, diluted 31,055  31,032  31,516  31,193  31,512
          
(1) 70,000,000 shares authorized; 30,700,198, 30,672,303, and 31,130,143 shares issued and outstanding, respectively, for the periods ended December 31, 2022, September 30, 2022, and December 31, 2021.

Select Financial Data

 As of and for the As of and for the
 Three Months Ended Year Ended
 December 31, September 30, December 31, December 31,
 2022  2022  2021  2022  2021 
Selected Performance Metrics:         
Return on average assets1.26% 1.15% 0.90% 1.05% 0.81%
Core return on average assets (non-GAAP)1.31% 1.19% 0.95% 1.09% 0.83%
Core return on average assets excluding solar tax impact (non-GAAP)1.38% 1.24% 0.72% 1.13% 0.84%
Return on average equity19.89% 17.79% 11.23% 15.65% 9.59%
Core return on average tangible common equity (non-GAAP)21.47% 19.11% 12.20% 16.73% 10.16%
Core return on average tangible common equity excluding solar tax impact (non-GAAP)22.58% 19.88% 9.23% 17.30% 10.31%
Average equity to average assets6.32% 6.44% 8.02% 6.74% 8.40%
Tangible common equity to tangible assets6.30% 6.00% 7.74% 6.30% 7.74%
Loan yield4.24% 4.11% 4.01% 4.03% 3.88%
Securities yield4.08% 3.35% 2.20% 3.14% 2.22%
Deposit cost0.34% 0.14% 0.09% 0.16% 0.10%
Net interest margin3.56% 3.50% 2.77% 3.22% 2.77%
Efficiency ratio(1)49.70% 49.92% 58.94% 53.30% 65.25%
Core efficiency ratio (non-GAAP)(1)48.76% 49.09% 57.18% 52.42% 64.24%
Core efficiency ratio excluding solar tax impact (non-GAAP)47.65% 48.24% 62.81% 51.68% 63.90%
          
Asset Quality Ratios:         
Nonaccrual loans to total loans0.53% 0.51% 0.85% 0.53% 0.85%
Nonperforming assets to total assets0.44% 0.69% 0.77% 0.44% 0.77%
Allowance for loan losses to nonaccrual loans207.53% 212.51% 127.10% 207.53% 127.10%
Allowance for loan losses to total loans1.10% 1.09% 1.08% 1.10% 1.08%
Annualized net charge-offs (recoveries) to average loans0.15% 0.29% 0.44% 0.16% 0.17%
          
Capital Ratios:         
Tier 1 leverage capital ratio7.52% 7.16% 7.62% 7.52% 7.62%
Tier 1 risk-based capital ratio11.82% 11.91% 12.98% 11.82% 12.98%
Total risk-based capital ratio14.28% 14.43% 15.95% 14.28% 15.95%
Common equity tier 1 capital ratio11.82% 11.91% 12.98% 11.82% 12.98%
          
(1) Efficiency ratio is calculated by dividing total non-interest expense by the sum of net interest income and total non-interest income

Loan and Held-to-Maturity Securities Portfolio Composition

(In thousands)At December 31, 2022 At September 30, 2022 At December 31, 2021
 Amount % of total
loans		 Amount % of total
loans		 Amount % of total
loans
Commercial portfolio:           
Commercial and industrial$925,641  22.5% $805,087  20.8% $729,385  22.1%
Multifamily 967,521  23.6%  884,790  22.9%  821,801  24.8%
Commercial real estate 335,133  8.2%  338,002  8.7%  369,429  11.2%
Construction and land development 37,696  0.9%  38,946  1.0%  31,539  1.0%
Total commercial portfolio 2,265,991  55.2%  2,066,825  53.4%  1,952,154  59.1%
            
Retail portfolio:           
Residential real estate lending 1,371,779  33.5%  1,332,010  34.5%  1,063,682  32.3%
Consumer and other 463,999  11.3%  467,793  12.1%  291,818  8.8%
Total retail 1,835,778  44.8%  1,799,803  46.6%  1,355,500  41.1%
Total loans held for investment 4,101,769  100.0%  3,866,628  100.0%  3,307,654  100.2%
            
Net deferred loan origination costs 4,233     4,662     4,570   
Allowance for loan losses (45,031)    (42,122)    (35,866)  
Total loans, net$4,060,971    $3,829,168    $3,276,358   
            
Held-to-maturity securities portfolio:           
PACE assessments 911,877  59.2%  856,701  57.4%  627,394  74.4%
Other securities 629,424  40.8%  635,722  42.6%  216,175  25.6%
Total held-to-maturity securities$1,541,301  100.0% $1,492,423  100.0% $843,569  100.0%

Net Interest Income Analysis

 Three Months Ended
 December 31, 2022 September 30, 2022 December 31, 2021
(In thousands)Average
Balance		Income /
Expense		Yield /
Rate		 Average
Balance		Income /
Expense		Yield /
Rate		 Average
Balance		Income /
Expense		Yield /
Rate
                  
Interest-earning assets:                 
Interest-bearing deposits in banks$85,886 $485 2.24% $222,071 $971 1.73% $561,027 $200 0.14%
Securities(1) 3,400,994  34,939 4.08%  3,522,863  29,735 3.35%  2,876,150  15,973 2.20%
Resell agreements 46,909  628 5.31%  232,956  1,845 3.14%  138,436  576 1.65%
Total loans, net(2)(3) 3,977,554  42,492 4.24%  3,693,688  38,264 4.11%  3,177,018  32,138 4.01%
Total interest-earning assets 7,511,343  78,544 4.15%  7,671,578  70,815 3.66%  6,753,342  48,887 2.87%
Non-interest-earning assets:                 
Cash and due from banks 5,267      4,783      8,072    
Other assets 289,979      265,736      249,476    
Total assets$7,806,589     $7,942,097     $7,010,890    
                  
Interest-bearing liabilities:                 
Savings, NOW and money market deposits$2,967,150 $5,161 0.69% $3,031,402 $2,329 0.30% $2,765,380 $1,220 0.18%
Time deposits and brokered certificates of deposit 204,185  521 1.01%  184,476  162 0.35%  215,562  187 0.34%
Total interest-bearing deposits 3,171,335  5,682 0.71%  3,215,878  2,491 0.31%  2,980,942  1,407 0.19%
Federal Home Loan Bank advances 451,032  4,713 4.15%  3,314  25 2.99%  —  — 0.00%
Other Borrowings 94,271  801 3.37%  82,009  671 3.25%  49,891  399 3.17%
Total interest-bearing liabilities 3,716,638  11,196 1.20%  3,301,201  3,187 0.38%  3,030,833  1,806 0.24%
Non-interest-bearing liabilities:                 
Demand and transaction deposits 3,522,352      4,053,953      3,290,932    
Other liabilities 73,838      75,143      126,746    
Total liabilities 7,312,828      7,430,297      6,448,511    
Stockholders' equity 493,761      511,800      562,379    
Total liabilities and stockholders' equity$7,806,589     $7,942,097     $7,010,890    
                  
Net interest income / interest rate spread  $67,348 2.95%   $67,628 3.28%   $47,081 2.63%
Net interest earning assets / net interest margin$3,794,705   3.56% $4,370,377   3.50% $3,722,509   2.77%
                  
Total deposits / total cost of deposits$6,693,687   0.34% $7,269,831   0.14% $6,271,874   0.09%
Total borrowings / total cost of funds$7,238,990   0.61% $7,355,154   0.17% $6,321,765   0.11%

(1) Includes Federal Home Loan Bank (FHLB) stock in the average balance, and dividend income on FHLB stock in interest income
(2) Amounts are net of deferred origination costs and the allowance for loan losses
(3) Includes prepayment penalty interest income in 4Q2022, 3Q2022, and 4Q2021 of $82, $800, and $353, respectively (in thousands)

Net Interest Income Analysis

 Year Ended
 December 31, 2022 December 31, 2021
(In thousands)Average
Balance		Income /
Expense		Yield /
Rate		 Average
Balance		Income /
Expense		Yield /
Rate
            
Interest-earning assets:           
Interest-bearing deposits in banks$258,214 $2,186 0.85% $521,681 $651 0.12%
Securities(1) 3,391,056  106,417 3.14%  2,461,661  54,615 2.22%
Resell agreements 182,304  4,237 2.32%  138,833  1,942 1.40%
Total loans, net(2)(3) 3,615,437  145,649 4.03%  3,180,093  123,318 3.88%
Total interest-earning assets 7,447,011  258,489 3.47%  6,302,268  180,526 2.86%
Non-interest-earning assets:           
Cash and due from banks 7,126      7,853    
Other assets 273,028      259,718    
Total assets$7,727,165     $6,569,839    
            
Interest-bearing liabilities:           
Savings, NOW and money market deposits$2,981,688 $10,068 0.34% $2,622,584 $4,788 0.18%
Time deposits and brokered certificates of deposit 195,030  987 0.51%  248,507  1,035 0.42%
Total interest-bearing deposits 3,176,718  11,055 0.35%  2,871,091  5,823 0.20%
Federal Home Loan Bank advances 114,521  4,738 4.14%  123  — 0.00%
Other Borrowings 86,205  2,854 3.31%  12,575  399 3.17%
Total interest-bearing liabilities 3,377,444  18,647 0.55%  2,883,789  6,222 0.22%
Non-interest-bearing liabilities:           
Demand and transaction deposits 3,746,152      3,017,621    
Other liabilities 82,931      116,256    
Total liabilities 7,206,527      6,017,666    
Stockholders' equity 520,638      552,173    
Total liabilities and stockholders' equity$7,727,165     $6,569,839    
            
Net interest income / interest rate spread  $239,842 2.92%   $174,304 2.64%
Net interest earning assets / net interest margin$4,069,567   3.22% $3,418,479   2.77%
            
Total deposits / total cost of deposits$6,922,870   0.16% $5,888,712   0.10%
Total borrowings / total cost of funds$7,123,596   0.26% $5,901,410   0.11%

(1) Includes Federal Home Loan Bank (FHLB) stock in the average balance, and dividend income on FHLB stock in interest income
(2) Amounts are net of deferred origination costs (fees) and the allowance for loan losses
(3) Includes prepayment penalty interest income in December YTD 2022 and December YTD 2021 of $1.7 million and $1.7 million, respectively

Deposit Portfolio Composition

 Three Months Ended
(In thousands)December 31, 2022 September 30, 2022 December 31, 2021
 Ending
Balance		 Average
Balance		 Ending
Balance		 Average
Balance		 Ending
Balance		 Average
Balance
Non-interest-bearing demand deposit accounts$3,331,067 $3,522,352 $3,839,155 $4,053,953 $3,335,005 $3,290,932
NOW accounts 206,434  200,633  204,473  210,972  210,844  204,556
Money market deposit accounts 2,445,396  2,385,446  2,549,024  2,437,920  2,227,953  2,190,423
Savings accounts 386,190  381,071  384,644  382,510  375,301  370,401
Time deposits 151,699  167,138  183,011  184,476  207,152  215,562
Brokered CD 74,251  37,047  —  —  —  —
Total deposits$6,595,037 $6,693,687 $7,160,307 $7,269,831 $6,356,255 $6,271,874


 Three Months Ended
 December 31, 2022 September 30, 2022 December 31, 2021
 Average
Rate
Paid(1)		 
Cost of
Funds		 Average
Rate
Paid(1)		 
Cost of
Funds		 Average
Rate
Paid(1)		 
Cost of
Funds
            
Non-interest-bearing demand deposit accounts0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
NOW accounts0.74% 0.52% 0.34% 0.19% 0.08% 0.09%
Money market deposit accounts1.16% 0.74% 0.43% 0.33% 0.16% 0.20%
Savings accounts0.75% 0.49% 0.32% 0.19% 0.11% 0.11%
Time deposits0.69% 0.41% 0.44% 0.35% 0.29% 0.34%
Brokered CD3.83% 3.72% 0.00% 0.00% 0.00% 0.00%
Total deposits0.57% 0.34% 0.19% 0.14% 0.08% 0.09%
            
Interest-bearing deposits excluding brokered CDs1.15% 0.68% 0.41% 0.31% 0.16% 0.19%
            
(1)Average rate paid is calculated as the weighted average of spot rates on deposit accounts as of December 31, 2022.

Asset Quality

(In thousands)December 31,
2022		 September 30,
2022		 December 31,
2021
Loans 90 days past due and accruing$—  $—  $— 
Nonaccrual loans held for sale 6,914   5,858   1,000 
Troubled debt restructured loans - accruing loans held for sale —   10,179   — 
Nonaccrual loans excluding held for sale loans and restructured loans 8,197   7,499   10,835 
Troubled debt restructured loans - nonaccrual 13,502   12,322   13,497 
Troubled debt restructured loans - accruing 6,102   18,396   24,997 
Other real estate owned —   —   307 
Impaired securities 36   37   63 
Total nonperforming assets$34,751  $54,291  $54,586 
      
Nonaccrual loans:     
Commercial and industrial$9,629  $9,356  $8,313 
Multifamily 3,828   3,494   2,907 
Commercial real estate 4,851   4,914   4,054 
Construction and land development —   —   — 
Total commercial portfolio 18,308   17,764   15,274 
      
Residential real estate lending 1,807   675   12,525 
Consumer and other 1,584   1,382   420 
Total retail portfolio 3,391   2,057   12,945 
Total nonaccrual loans$21,699  $19,821  $28,219 
      
Nonaccrual loans to total loans 0.53%  0.51%  0.85%
Nonperforming assets to total assets 0.44%  0.69%  0.77%
Allowance for loan losses to nonaccrual loans 207.53%  212.51%  127.10%
Allowance for loan losses to total loans 1.10%  1.09%  1.08%
Annualized net charge-offs (recoveries) to average loans 0.15%  0.29%  0.44%

Credit Quality

 December 31, 2022 September 30, 2022 December 31, 2021
($ in thousands)     
Criticized and classified loans     
Commercial and industrial$32,004 $26,756 $36,073
Multifamily 19,860  42,105  99,932
Commercial real estate 35,180  39,628  74,168
Construction and land development 16,426  2,424  7,476
Residential real estate lending 1,807  675  12,817
Consumer and other 323  1,382  420
Total loans$105,600 $112,970 $230,886


      
Criticized and classified loans to total loans     
Commercial and industrial0.78% 0.69% 1.09%
Multifamily0.48% 1.09% 3.02%
Commercial real estate0.86% 1.02% 2.24%
Construction and land development0.40% 0.06% 0.23%
Residential real estate lending0.04% 0.02% 0.39%
Consumer and other0.01% 0.04% 0.01%
 2.57% 2.92% 6.98%

Reconciliation of GAAP to Non-GAAP Financial Measures
The information provided below presents a reconciliation of each of our non-GAAP financial measures to the most directly comparable GAAP financial measure.

 As of and for the As of and for the
 Three Months Ended Year Ended
(in thousands)December 31,
2022		 September 30,
2022		 December 31,
2021		 December 31,
2022		 December 31,
2021
Core operating revenue         
Net Interest income (GAAP)$67,346  $67,628  $47,081  $239,840  $174,304 
Non-interest income 4,226   5,003   12,361   23,897   28,389 
Less: Securities (gain) loss 1,373   1,844   106   3,637   (649)
Less: Subdebt repurchase gain —   (617)  —   (617)  — 
Core operating revenue (non-GAAP)$72,945  $73,858  $59,548  $266,757  $202,044 
Add: Tax (credits) depreciation on solar investments 1,706   1,306   (5,337)  3,811   1,055 
Core operating revenue excluding solar tax impact (non-GAAP)$74,651  $75,164  $54,211  $270,568  $203,099 
          
Core non-interest expense         
Non-interest expense (GAAP)$35,570  $36,258  $35,032  $140,571  $132,255 
Less: Other one-time expenses(1) —   —   (984)  (738)  (2,466)
Core non-interest expense (non-GAAP)$35,570  $36,258  $34,048  $139,833  $129,789 
          
Core net income         
Net Income (GAAP)$24,755  $22,944  $15,924  $81,477  $52,937 
Less: Securities (gain) loss 1,373   1,844   106   3,637   (649)
Less: Subdebt repurchase gain —   (617)  —   (617)  — 
Add: Other one-time expenses —   —   984   738   2,466 
Less: Tax on notable items (296)  (319)  (257)  (927)  (457)
Core net income (non-GAAP)$25,832  $23,852  $16,757  $84,308  $54,297 
Add: Tax (credits) depreciation on solar investments 1,706   1,306   (5,337)  3,811   1,055 
Add: Tax effect of solar income (368)  (340)  1,259   (940)  (265)
Core net income excluding solar tax impact (non-GAAP)$27,170  $24,818  $12,679  $87,179  $55,087 
          
Tangible common equity         
Stockholders' equity (GAAP)$508,955  $487,738  $563,875  $508,955  $563,875 
Less: Minority interest (133)  (133)  (133)  (133)  (133)
Less: Goodwill (12,936)  (12,936)  (12,936)  (12,936)  (12,936)
Less: Core deposit intangible (3,105)  (3,366)  (4,151)  (3,105)  (4,151)
Tangible common equity (non-GAAP)$492,781  $471,303  $546,655  $492,781  $546,655 
          
Average tangible common equity         
Average stockholders' equity (GAAP)$493,761  $511,800  $562,379  $520,638  $552,173 
Less: Minority interest (133)  (133)  (133)  (133)  (133)
Less: Goodwill (12,936)  (12,936)  (12,936)  (12,936)  (12,936)
Less: Core deposit intangible (3,232)  (3,494)  (4,299)  (3,622)  (4,748)
Average tangible common equity (non-GAAP)$477,460  $495,237  $545,011  $503,947  $534,356 
          
Core return on average assets         
Denominator: Total average assets$7,806,589  $7,942,097  $7,010,890  $7,727,165  $6,569,839 
Core return on average assets (non-GAAP)2 1.31%  1.19%  0.95%  1.09%  0.83%
Core return on average assets excluding solar tax impact (non-GAAP)2 1.38%  1.24%  0.72%  1.13%  0.84%
          
Core return on average tangible common equity         
Denominator: Average tangible common equity$477,460  $495,237  $545,011  $503,947  $534,356 
Core return on average tangible common equity (non-GAAP)2 21.47%  19.11%  12.20%  16.73%  10.16%
Core return on average tangible common equity excluding solar tax impact (non-GAAP)2 22.58%  19.88%  9.23%  17.30%  10.31%
          
Core efficiency ratio         
Core operating revenue (non-GAAP)$72,945  $73,858  $59,548  $266,757  $202,044 
Core efficiency ratio (non-GAAP) 48.76%  49.09%  57.18%  52.42%  64.24%
Core efficiency ratio excluding solar tax impact (non-GAAP) 47.65%  48.24%  62.81%  51.68%  63.90%

(1) Salary and COBRA reimbursement expense for positions eliminated, plus expenses related to the termination of the merger agreement with Amalgamated Bank of Chicago
(2) Calculated using core net income (non-GAAP) and core net income excluding solar tax investments (non-GAAP), respectively, as the numerator.

1 Reconciliations of non-GAAP financial measures to the most comparable GAAP measure are set forth on the last page of the financial information accompanying this press release and may also be found on our website, www.amalgamatedbank.com.


Primary Logo

Source: Amalgamated Financial Corp.

2023 GlobeNewswire, Inc., source Press Releases